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The Strong Law Firm, PC

Chapter 7 vs. Chapter 13: Which is Right for Your North Virginia Debt?

Michael Strong
Senior Attorney, Strong Law Firm
After weeks of weighing your options and trying every other course of action for dealing with your Virginia financial crisis, you’ve decided to file for bankruptcy. It means a difficult road ahead, but it could also mean a fresh start and greater financial stability in the future.

Because everyone approaches bankruptcy from a different background, it’s advisable to seek professional guidance before filing. You want to be sure that you aren’t missing any crucial details that might spare you the loss of valuable assets. You also want to time your petition so that it is most likely to be successful.

Here, we’ll provide you with an overview of the differences between the two major bankruptcy options available to consumers.

Chapter 7 “Liquidation” Bankruptcy is a liquidation of any of your significant assets that culminates in the total discharge of all qualifying debt.

It is best in situations where you do not have a steady source of income, are having trouble keeping up with basic expenses, and do not have large amounts of equity in property or other assets.

Advantages:
  • The process is quick, sometimes taking as little as 3 months
  • Most unsecured debts, such as credit cards, leases, medical bills, and personal loans will be discharged
  • Creditors are legally barred from contacting you during the bankruptcy process or after loans have been discharged
  • You will be able to keep most reasonably necessary personal property such as your primary vehicle and personal affects up to a certain value

Drawbacks:
  • Many of your assets will be sold 
  • It will not stop foreclosure
  • Co-signees to any of your loans will not be protected
  • Not all debt is discharged
  • It is more damaging to your credit score than Chapter 13

Chapter 13 “Wage Earner’s” Bankruptcy is a 3 to 5 year process of debt consolidation that culminates in the discharge of any qualifying debt that remains.

It is best in situations where you have a steady source of income and can keep up with essential living expenses but not debt, as well as property or other significant assets that you would like to keep.

Advantages:
  • You can keep most assets and property
  • You make one payment to your trustee, who distributes it to your creditors
  • Co-signers to your loans have greater protection
  • It may help avoid wage garnishment
  • Creditors cannot contact you or take further action to collect during the bankruptcy process or after your loans have been discharged
  • It is less harmful to your credit score than a Chapter 7

Disadvantages:
  • The process takes 3 to 5 years
  • You will need to make regular payments throughout the bankruptcy process
  • Rigid budget
  • Not all debt is discharged

The Northern Virginia bankruptcy laywers at The Strong Law Firm assist clients struggling with Virginia, District of Columbia, and Maryland debt. Due to the growing complexity of bankruptcy law, it is in your best interest to seek good legal counsel while building a bankruptcy petition. Consultations are free. Schedule an appointment today by calling our offices at 887-344-8189 or filling out our quick online contact form.

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